If the ending inventory balance is understated,net income of the same period

Name: If the ending inventory balance is understated,net income of the same period
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Question

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When the ending inventory balance is understated, the cost of goods sold (COGS) is overstated because COGS is calculated as beginning inventory plus purchases minus ending inventory. An overstated COGS leads to an understated net income, as net income is calculated by subtracting COGS and other expenses from sales revenue.

If the Ending Inventory Balance Is Understated,net Income of the Same